President Donald Trump is preparing to slap tariffs on Chinese goods just after midnight Friday, the first shot in a trade war between the world's two biggest economies.Tariffs on $34 billion of Chinese goods are scheduled to take effect at 12:01 a.m. in Washington, the U.S. Trade Representative confirmed in an email Thursday. The milestone marks a new and damaging phase in a conflict that has roiled markets and cast a shadow over the global growth outlook.In Beijing, policymakers are digging in for what could be a protracted fight—one in which they say they won't be the aggressor. Beijing has said retaliatory tariffs on U.S. goods ranging from soybeans to pork will go into effect immediately after the U.S. acts.With further tit-for-tat levies already threatened between the U.S. and China, some investors are concerned this week may mark the start of a trade war that spreads globally. Trump has already imposed tariffs on imported steel, aluminum, solar panels, and washing machines.The looming tariffs have also weighed on markets, prompting central bank officials to reassure investors. The European Union has taken a firm stance ahead of the escalation, with Bank of England Governor Mark Carney saying that the rise of protectionism will affect trade flows and push up import costs.Here's a run down of the key facts about China's position in the conflict:

What goods are to be targeted?

On June 15, Trump said the U.S. would begin charging additional duties of 25 percent on $50 billion worth of Chinese imports in response to what he says is theft of American intellectual property. That's split into two rounds—$34 billion on Friday and $16 billion later.China has said it will fight back with “equal scale, equal intensity.”

How will the tariffs be implemented?

Customs services for the U.S. and China will be responsible for collecting the new tariffs as imports pass through the port of entry. When products on the list for extra levies are declared to customs, the importer will pay the additional levies.

Are markets ready?

Chinese stocks have taken a beating in recent weeks, entering a bear market, as concerns about the trade war have mingled with worries about how an ongoing debt-control campaign will feed through into the outlook for economic growth.People's Bank of China (PBOC) Party Chief Guo Shuqing sought to calm markets, saying bond market risks are controllable and the economy is capable of bearing the impacts of trade frictions. The economic fundamentals mean a sharp depreciation of the yuan is unlikely, he said in an interview with the Financial News.U.S. Federal Reserve Chairman Jerome Powell said on June 20 that officials are beginning to hear that companies are postponing investment and hiring due to uncertainty about what comes next. “Changes in trade policy could cause us to have to question the outlook,” he said during a panel talk in Portugal.U.S. stocks have wobbled on trade frictions, but the S&P 500 Index remains roughly level from the start of the year.

What can the real-world impact be?

The tariffs are already having an effect. As an example, Chinese companies are reselling U.S. soybeans, and Chinese companies are expected to cancel most of the remaining soybeans they have committed to buy from the U.S. in the year ending Aug. 31, once the extra tariffs take effect.Some American business are bracing for impact. U.S. manufacturers and business groups have said the tariffs could increase their costs and lead to higher prices for consumers.

Instant Insights /

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